2022 Mortality Improvement Survey Report

Link: https://www.soa.org/resources/research-reports/2022/mort-improve-survey/

Report PDF: https://www.soa.org/4ad811/globalassets/assets/files/resources/research-report/2022/mort-improve-survey.pdf

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Excerpt:

The Committee on Life Insurance Mortality and Underwriting Surveys of the Society of Actuaries sent
companies a survey in May of 2019 on mortality improvement practices as of year-end 2018. The survey
results were released in January 2022. The survey was completed by respondents prior to the onset of
COVID-19. The present report provides an opportunity to update the results for pandemic-based changes
and compare the before and after surveys.
The 2022 survey was opened in March 2022 and closed by the end of April. Thirty-five respondent
companies participated in this survey, with 29 from the U.S. and six from Canada. This group was further
divided between direct writers (26) and reinsurers (nine).
This survey focused on the use of mortality improvement and how it has changed for financial projection
and pricing modeling following the initial stages of COVID-19. Details regarding assumptions and opinions
on mortality improvement in general were asked of the respondents.
National Association of Insurance Commissioners discussions on mortality improvement factors due to
COVID-19 for reserving purposes have taken place, but this survey was conducted before any adjustments
reacting to them.
Seventy-four percent (26 of 35) of respondents indicated using durational mortality improvement
assumptions in their life and annuity pricing and/or financial projections. Moreover, of those that used
durational mortality improvement assumptions, attained age and gender were the top two characteristics
in which assumptions varied.
Respondents were asked to indicate the different limitations when applying durational mortality
improvement assumptions. The Survey found that the most common lowest and highest attained age to
which durational mortality improvement was applied were 0 and about 100, respectively. The lowest and
highest durational mortality improvement rate ranged from -1.50% (deterioration) to 2.80%
(improvement). The time period in which the mortality improvement rates were applied ranged from 10 to
120 years, but this varied between life (10/120) and annuities (30/120). The most common time period was
20 to 30 years for life; less consensus was seen for annuities. Analysis is provided in Appendix C for
instances when highlights are shared in the body of the report.

Author(s): Ronora Stryker, Max Rudolph

Publication Date: December 2022

Publication Site: SOA Research Institute

Transition to a High Interest Rate Environment: Preparing for Uncertainty

Link: https://www.soa.org/globalassets/assets/Files/Research/Projects/research-2015-rising-interest-rate.pdf

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Interest rates cycle over long periods of time. The journey tends to be unpredictable, full of
unexpected twists and turns. This project focuses on the impact of interest rate volatility on life
insurance products. As usual, it brought up more questions than it answered. It points out the
importance of stress testing for a specific block of business and the risk of relying on industry
rules of thumb. Understanding the nuances of models could make the difference between safe
navigation of a stressed environment and a default. Proactive and resilient practices should
increase the odds of success.


Hyman Minsky had it right—stability leads to instability. We live in an era where monetary
policies of central banks steer free markets in an effort to soften the business cycle. Rates have
been low for over 20 years in Japan, reshaping the global economy.

The primary goal of this paper is to explore rising interest rates, but that is not possible without
considering that some rates could stabilize at low levels or even decrease. Following this path,
the paper will look at implications of interest rate changes for the life insurance industry, current
stress testing practices, and how a risk manager can proactively prepare for an uncertain future.
A paper published in 2014 focused on why rates could stay low, and some aspects of this paper
are similar (e.g., description of insurance products). This paper also uses a sample model office
to help practitioners look at their own exposures. It includes typical interest-sensitive insurance
products and how they might perform across various scenarios, as well as a survey to establish
current practices for how insurers are testing interest rate risk currently.

Author(s): Max Rudolph, Randy Jorgensen, Karen Rudolph

Publication Date: July 2015

Publication Site: SOA Research Institute

2022 Predictions

Link: https://www.linkedin.com/pulse/2022-predictions-max-rudolph/

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Regional conflicts are heating up around the world. Resource needs will accelerate the trend. Fresh water in the Himalayas provide multiple countries who have nuclear arsenals. Oil and rare earth metals could also trigger a war. Climatic events are happening more often, so the cost takes money away from solutions while making the goals seem more obvious.

….

Resource depletion has no recommended debit treatment from accountants, but attribution analysis is going to do the work after the fact and charge companies for their past practices through the court system. I assume this is how the asbestos risk played out but I will need to learn more about similar historical events as these events play out. How should this enter your thought process as an investor? In 2021 I wrote 4 papers about climate; Climate System, Integrated Assessment Models, Impact of Climate Change on Investors and Municipalities and Climate Change. They are part of the SOA’s Environmental Risk Series. The impact of climate on investors will continue to evolve for many years. One topic of interest to me is how TCFD (disclosures) will play out – we could see “bad” investments like oil companies, gun makers and cigarette companies become privately owned. This would make it harder to apply peer pressure so is an important reminder to be careful what you wish for!

Author(s): Max Rudolph

Publication Date: 16 Jan 2022

Publication Site: LinkedIn

14th Annual Survey of Emerging Risks Key Findings

Link: https://www.soa.org/resources/research-reports/2021/14th-annual-survey/

Description:

The Casualty Actuarial Society, Canadian Institute of Actuaries, and the Society of Actuaries are pleased to make available results from the 2020 Emerging Risks Survey, the fourteenth in the series. Conducted by Max J. Rudolph of Rudolph Financial Consulting LLC, the survey incorporated a set of Emerging Risks defined by the World Economic Forum as the basis for several of the questions.  The survey also included questions related to current risk management topics.

Now available is a report presenting the major findings from the study. The full report will be released later in the year.

Author: Max J. Rudolph, FSA, CFA, CERA, MAAA

Rudolph Financial Consulting, LLC

Publication Date: January 2021

Publication Site: Society of Actuaries